Barra de Colotepec: The lots in these photos may or may not be for sale.

Real Estate In Paradise

Photos: Barbara Joan Schaffer

I froze as the young man with the machete approached
me on a deserted country lane just one block from Zicatela
beach on a lovely Sunday morning. “Pardon me,” he said,
“would you be interested in buying this lot?” — pointing to the land
on which he had been working.

Welcome to Puerto Escondido where shopkeepers, taxi drivers
and the friendly fellow in the bar (who is as likely to be a foreigner
as a Mexican), all seem to have properties for sale. Of course, the
properties aren’t really theirs, they are just angling for a commission.

Welcome to the land of the middle-man (comisionista). Everywhere
you go there are lots for sale, some signs say “by owner”, but
are they?

It is so easy to fall in love with Puerto Escondido. You are sitting
on the terrace of a beachside restaurant enjoying a margarita or
two and thinking, “I could live here.” And you can. I bought my land
and built my house in 2005 and have never regretted my decision.
But I know people who were not as fortunate, who fell victim to
hustlers (yes, there are snakes in our paradise) and lost money on
nefarious real estate deals or even honest ones where the buyer
did not understand the market or the laws. The number one complaint
of real estate lawyers in Puerto is that their clients will not
listen to them when they explain the costs and risks of buying land
here, and then later these same clients blame them when things
turn out badly.

Carrizalillo

LOCATION, LOCATION, LOCATION

Note: prices shown below are based on reports of recent sales.

A lot of what we call Puerto Escondido really is outside the town
limits, and even the part that is in the town is divided between two
municipalities, each with its own laws regarding buying real estate.
Worse yet, the
two municipalities
— San Pedro Mixtepec
and Santa
María Colotepec
are in a decades-old
conflict as to
who controls what.

Rinconada

Bacocho,
Rinconada, and
Carrizalillo — on
the western end of
the town, near the
airport — are in San
Pedro Mixtepec
and are favored by
many Mexicans and
foreigners. The lots
are relatively small,
around 300 m2,
but there are many
shops and restaurants
in the area.
Also, you can often
get broad-band internet
in Bacocho and Rinconada. Lots in Bacocho and Rinconada
sell for upwards of $105 U.S. ($2,000 pesos) m2. In
Carrizalillo it is
around $300 U.S., much more for ocean-front properties.

Bacocho

The Punta de Zicatela, (Brisas de Zicatela) in Colotepec is also
very popular. But its history of land disputes makes ownership
there more problematic, and realtors tend to avoid the area.

Above Zicatela, on the hills on the north side of the highway,
are the communities of Lázaro Cárdenas and
Emiliano Zapata.
There are many new developments there, like Linda
Vista and
Delfines.

The Barra de Colotepec is on the east
side of the Punta. There
are ocean-front properties and properties with ocean views. It’s a
fast-growing area with lots in all price ranges.

Rancho Neptuno

Going east 20 minutes on the Coast Highway you reach Rancho
Neptuno and Costa Cumaná. A 1,750 m2, ocean-front lot in
Cumaná goes for around $150 U.S. m2, but the much larger properties
one block from beach are $50 m2. Ocean-front lots in Neptuno
cost around $110 m2.

Don't be fooled by all the vacant lots, much of the land in and
around Puerto is owned by investors who have no interest in selling.
Sometimes a lot will have a for sale sign, but the price may be twice
the market value. People who are in no hurry to sell are willing to wait
years for the market to reach their asking price.

Article 27 of the Mexican Constitution prohibits foreigners from
owning property within 50 kms. of the coast. In 2013, the Chamber
of Deputies voted in favor of a constitutional reform that would
have allowed foreigners to buy land on the coast, but the bill was
never considered by the Senate. There is no reason to believe that
this provision of the constitution will be changed.

Foreigners are,
however, permitted
to possess land
inside the restricted
zone through a
land trust administered
by a bank.
The trust (fideicomiso)
has a 50-year duration and
can be renewed.
Although the bank
holds the title to
the property, it
does not own it,
nor is it responsible
for liens or property
taxes or irregularities
that may cause
the loss of the land.
Fideicomisos costs
around $2,500 U.S.
to set up, in bank fees
alone, and around $500 U.S. a year to maintain.

To get a fideicomiso you must have clear title (escritura pública)
to your property. All the land in Bacocho, Rinconada, Carrizalillo,
and adjacent communities are considered private property and
have escrituras. The communities of Santa María, Tamarindos, and
Lázaro Cárdenas are more problematic, but some of the properties
in Lázaro Cárdenas do have escrituras.

CLEAR TITLES (ESCRITURAS PÚBLICAS) VS ACTAS DE
POSESIÓN

The Federal Government, through local districts, issues titles
(escrituras públicas) on private property. But, most of the land in
the state of Oaxaca, including part of Puerto Escondido and its
neighboring communities, is not administered by the federal
government and is not considered private property. In these
areas, known as communal land, there are no property titles, but
rather actas de posesión issued by the local land offices
(bienes
comunales). If you are a Mexican national, having an acta offers the
same protection as having a deed.

COMMUNAL LAND

The communal lands of San Pedro Mixtepec and Santa
María Colotepec are but two of the 1,602 legally constituted
communal and ejido lands in Oaxaca. Every three years
a new president and commissioners are elected by the comuneros
to administer the property of each bienes comunales.
This commission is entirely independent of the municipality.
Indeed, many municipalities include two or more
bienes comunales. (There are 570 municipalities in Oaxaca.)

Actas de posesión cannot be issued to foreigners. Since all the
land in the Punta de Zicatela, and almost all the land on the Coast
until Huatulco, is
administered by
local communities,
it is, in theory,
impossible to have
an escritura on a
property there, and
without an escritura
you cannot have
a fideicomiso.

In practice,
however, many
Mexicans do have
escrituras for their
properties on communal
lands and
many foreigners
have fideicomisos.
How is this possible?
If you have an
acta de posesión
from Santa María
Colotepec, you can
get an escritura issued
by the land office for the District of Pochutla, although it will
cost you thousands of dollars. This escritura is an official document
that is recognized by the banks that issue fideicomisos.

But there is a catch. The Tribunal Agrario in Oaxaca is the only
court authorized to handle property disputes on communal land,
and it only recognizes actas de posesión. On the other hand, having
an escritura can be useful in cases of fraud.

HOW FOREIGNERS BUY PROPERTY ON COMMUNAL LAND

All property owners in condo communities like Cumaná and
Rancho Neptuno have actas de posesión and escrituras. These
communities reached an agreement with the Bienes Comunales
of Colotepec whereby the names of the banks issuing the fideicomisos
to foreigners were put on the names of the actas. Without
having the acta, foreigners would not be able to sell their
properties.

EJIDO VS. COMMUNAL LAND

Both are legally referred to as social land. An ejido is a federal
land grant, often on the site of a former hacienda or plantation.
Communal land is territory recognized as historically
belonging to a specific, usually indigenous, community.

The Bienes Comunales of Colotepec will issue actas de posesión
to Mexican nationals and to Mexican corporations. A Mexican corporation
can be wholly owned by foreign nationals but must have
a Mexican administrator — usually an accountant. This is the safest
route, and it’s the one recommended by the bienes comunales. It
costs less to set up a corporation than it does to get an escritura
from Pochutla and there is no need for a fideicomiso. But, as a corporation,
you must show some business activity — like renting your
house — and pay taxes.

PRESTANOMBRE (STRAW BUYER)

The quick and easy and probably most common solution, but
also the riskiest option, is to pay a Mexican national to put a property
into her name. This sounds insane, and it is. The straw buyer
(prestanombre) is the legal owner of the property, and if he or his
heirs or his estranged wife decides to steal it, there is nothing you
can do. It is against Mexican law to act as a prestanombre, and any
contract you make will be non-binding. The real buyer is put in the
position of a renter.